Not only will the Canadian housing boom not go bust, as is happening in the U.S., but over the long-term housing prices here will continue to appreciate, rising by an average of nearly four per cent over the coming quarter century, the TD Bank says.

“The report concludes that fears that an aging population will significantly depress home price growth are overblown,” it said. “Although slowing population growth will act as a constraint on price gains, the impact will be offset by higher home-ownership rates, tighter labour markets and more modest new-home construction.”

In contrast to the US, there was no widespread housing bubble here, and as such, most analysts expect that housing-price increases in most cities in Canada will, in the short term, merely moderate, not be reversed.

And moderate price increases is what the TD Bank is also forecasting for the next 25 years.

“The main conclusion is that the national average of home prices is expected to rise at close to a four-per-cent average annual rate over the next 25 years,” it said, adding, however, that the increases will vary widely from neighbourhood to neighbourhood, city to city and year to year.

That’s down from the 5.6-per-cent average increase over the past 25 years, but so is inflation, it noted.

Once adjusted for expectations that inflation will remain at a relatively low two-per-cent annual rate, the projected after-inflation increase in price over the coming 25 years will be two per cent, a notch above what was a 1.9 per cent after-inflation increase over the past 25 years.

“Canada’s largest cities will continue to experience above-average price gains,” it said.
“Toronto and Vancouver will particularly benefit from the increasing reliance on immigration to fuel population growth.”

Calgary and Edmonton, where after-inflation house prices, despite the recent surge, have been flat over the past quarter-century, will also see above-average gains of more than four per cent but much less than the current unsustainable increases, as will Montreal and Victoria.

Cities such as Ottawa, Halifax, Quebec City and a handful of other Ontario cities will see average price increases, it said. Regina, Winnipeg, Windsor, Saint John, N.B., St. John’s, NL., Saskatoon, Thunder Bay, and most rural areas can expect below-average gains of two to three per cent.

Meanwhile, CIBC World Markets doubts that the tanking of the US housing market will be enough to push Canada’s main export market into recession, which is also good news for Canadians.

In the U.S., a housing slump is no longer a forecast, it’s a reality, CIBC World Markets noted in its analysis. And as the value of their homes slides, so does the ability of Americans to tap into their home equity to finance other spending as they did during the prolonged real-estate boom.

A recent study indicated that Americans last year extracted a record $825 billion in equity from their homes, roughly $250 billion of which went directly into consumer spending.

But “new-found labour income gains look to ease some of the real estate pain, and mitigate the consumer plunge,” it said, citing evidence that U.S. wages and salaries are now an “impressive” 7.7 per cent higher than a year earlier.

When combined with modest job growth, total labour compensation is now rising at an even greater 8.8 per cent year-to-year pace, it said.

The increase in earnings should boost consumer spending by $125 billion, cushioning the US economy from the estimated $200-billion drop in spending that will result from the collapse of the housing boom, easily preventing a consumer-led recession, it concluded.